C. F. Smith Co. v. Fitzgerald, 30.
| Decision Date | 06 March 1935 |
| Docket Number | No. 30.,30. |
| Citation | 259 N.W. 352,270 Mich. 659 |
| Parties | C. F. SMITH CO. v. FITZGERALD, Secretary of State, et al. |
| Court | Michigan Supreme Court |
OPINION TEXT STARTS HERE
Suit by the C. F. Smith Company against Frank D. Fitzgerald, as Secretary of the State of Michigan, and another, wherein the Kroger Grocery & Baking Company and others and the Michigan United Cigar Stores, Inc., and another, intervened as plaintiffs, and the Standard Oil Company (Indiana) and others intervened as defendants. From a decree dismissing the bill of complaint and the auxiliary bills of interveners, plaintiff and the named intervening plaintiffs appeal.
Affirmed.Appeal from Circuit Court, Wayne County, in Chancery; Robert M. Toms, judge.
Argued before the Entire Bench, except BUTZEL, J.
Harry Platt, of Detroit, for appellant Michigan Cigar Stores, Inc.
A. Fellman and Butzel, Levin & Winston, all of Detroit (Robert S. Marx, of Cincinnati, Ohio, of counsel), for all other appellants.
Arthur J. Abbott, of Detroit, for intervening defendants and appellees Standard Oil Co. (Indiana) and others.
Harry S. Toy, Atty. Gen., and Peter J. Monaghan, Jr., and Edmund E. Shepherd, Asst. Attys. Gen., for appellees.
Patrick H. O'Brien, Atty. Gen., and I. Z. Acoff and M. Thomas Ward, Asst. Attys. Gen., for principal defendants and appellees.
Plaintiff filed a bill of complaint to enjoin defendants, their agents, representatives, and successors in office, during the pendency of suit, from taking steps to enforce Act No. 265, Public Acts of 1933, against plaintiff, its agents, servants, and employes, and all others similarly situated. It asked a permanent injunction, and a declaration that Act No. 265, Public Acts of 1933, is unconstitutional and void. Alternatively, it asked that if Act No. 265, Public Acts of 1933, was held constitutional and valid, the court declare the general sales tax law, Act No. 167, Public Acts of 1933, null and void, and for other and further relief.
Kroger Grocery & Baking Company and a large number of other corporations and individuals intervened as plaintiffs. Standard Oil Company (Indiana), an Indiana corporation, and a number of other corporations engaged in the gasoline and oil business, intervened as defendants.
The bill of complaint attacked Act No. 265, Public Acts of 1933, as unconstitutional on several grounds hereinafter more particularly discussed. Subsequently, ancillary bills of complaint were filed by the intervening plaintiffs. Upon filing of the bill, a temporary injunction was issued. The principal defendants appeared through the Attorney General and moved to dismiss the bill of complaint because plaintiff had an adequate remedy at law; the bill of complaint did not state a cause for equitable relief, and because Act No. 265, Public Acts 1933, and Act No. 167, Public Acts of 1933, were constitutional and valid. A motion to dissolve the injunction issued was made by the Attorney General for the reasons the injunction was issued ex parte without a hearing and without notice to defendants; the court had no jurisdiction or power to enjoin the collection of any tax, and no jurisdiction or power to enjoin the collection of license fees or taxes provided by Act No. 265, Public Acts of 1933, or to enjoin defendants from enforcing the act, because plaintiff had an adequate remedy at law and the bill of complaint did not state a cause for injunctive relief. Motions to dismiss were made on behalf of the intervening defendants. A stipulation that the motions to dismiss should be treated to apply to all ancillary bills as well as to the original bill of complaint was filed. Stipulations were made between counsel for the respective parties relating to amendments, waiver of appeal bond, continuance of the temporary injunction, eliminating from the printed record on appeal the petitions for intervention and orders made thereon and other purposes. The case was brought on for hearing upon the bill of complaint, the motions hereinbefore mentioned, and the stipulations of counsel. The trial court filed an opinion and entered a decree dismissing the bill of complaint and the ancillary bills of interveners. Plaintiff and intervening plaintiffs appeal.
1. The Legislature passed, over the Governor's veto, Act No. 265, Public Acts 1933, to provide for the licensing and taxation of chain stores. The act provides: ‘From and after thirty days after this act shall take effect, it shall be unlawful for any person, firm, corporation, copartnership or association, either foreign or domestic, to establish, open, maintain or operate any branch or chain store within this state without having obtained a license so to do from the secretary of state of the state of Michigan.’ Section 1, Act No. 265, Pub. Acts 1933.
‘The term ‘branch or chain store,’ as used in this act shall be construed to mean and include any store or stores, or any mercantile establishment or establishments in excess of one which are owned, operated, maintained or controlled by the same person, firm, corporation, copartnership or association, either domestic or foreign, in which goods, wares or merchandise of any kind are sold at retail.' Section 2, Act No. 265, Pub. Acts 1933.
There is an exception in the act of any place or places of business commonly known as gasoline filling stations or gasoline bulk plants which deal primarily in the sale or distribution of petroleum products. Section 2, Act No. 265, Pub. Acts 1933.
The schedule of license fees prescribed by the act is contained in section 3, as follows:
‘Every person, firm, corporation, copartnership or association establishing, opening, maintaining or operating within this state under the same general management, supervision. ownership or control, two or more stores or mercantile establishments where any goods, wares or merchandise are sold or offered for sale at retail, shall be deemed a branch or chain store operator, and for such stores established, opened, maintained or operated in excess of one shall pay the license fees hereinafter prescribed for the privilege of establishing, opening, maintaining or operating each such store or mercantile establishment in excess of one. The license fees hereinprescribed shall, except as herein otherwise provided, be paid annually, and shall be in addition to any license fees, taxes on sales or ad valorem taxes now prescribed or now in effect, or as the same may hereafter be amended. The license fees to be paid by operators of branch or chain stores shall be as follows:
‘1. Upon two stores or more but not to exceed three stores the annual license fee shall be ten dollars for each such store in excess of one.
2. Upon four stores or more but not to exceed five stores the annual license fee shall be twenty-five dollars for each such store in excess of three.
‘3. Upon six stores or more but not to exceed ten stores the annual license fee shall be fifty dollars for each such store in excess of five.
‘4. Upon eleven stores or more but not to exceed fifteen stores the annual license fee shall be one hundred dollars for each such store in excess of ten.
‘5. Upon sixteen stores or more but not to exceed twenty stores the annual license fee shall be one hundred fifty dollars for each such store in excess of fifteen.
‘6. Upon twenty-one stores or more but not to exceed twenty-five stores the annual license fee shall be two hundred dollars for each such store in excess of twenty.
Plaintiffs attack the act as unconstitutional, and the question presented for the consideration of the court is the validity of the act.
2. Act No. 265, Public Acts of 1933, was passed by a large majority of the members constituting a co-ordinate branch of government. They are presumed to have acted within the scope of their authority. We cannot suppose they intentionally spent their time in enacting a measure which they knew or had reason to believe would be ineffective and useless because unconstitutional. The members of the judicial branch of the government are sworn to uphold the Constitution of the United States and the Constitution of this state. In a clear case of conflict between the Constitution of the United States or the Constitution of this state and an act of the Legislature, this court has no discretion but to uphold the provisions of the Constitution adopted by the people, and set aside the enactment of the Legislature outside the scope of their authority, and which the people have prohibited them by the Constitution from enacting. A statute is to be treated with that deference due to the deliberate action of a co-ordinate branch of government and is to be set aside only when it is apparent it was the result of action which the Legislature was prohibited by the Constitution from taking. It is only thus the right of the people to rule may be preserved from legislative absolutism and effect be given to the fundamental maxim of American jurisprudence that sovereignty resides in the people.
3. Governments may effectively function only through officers, agents, and employees. If these devote their time, energy, and services to the affairs of government, they are entitled to compensation; and, to pay compensation to the officers, agents, and employees of government, and enable the state to perform its functions, revenue is necessary. The most general method of raising revenue is by taxation. ‘It costs something to be governed.’ Merrick v. N. W. Halsey & Co., 242 U. S. 568, 37 S. Ct. 227, 231, 61 L. Ed. 498. The members of the Convention which framed the Constitution and the people who adopted it knew the state government must have revenue to meet its necessities, or cease to function. Union Steam Pump Sales Co. v. Secretary of State, 216 Mich. 261, 185 N. W. 353.
‘Taxation is a mode of raising revenue for public purposes only, and, as is said in some of...
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